Friday, December 17, 2010

"The likely change in government in 2011 increases the political risks," that Ireland will not follow through on the deep budget cuts, bank restructuring and other measures promised to restore the economy, the report said in a section assessing the country's ability to repay IMF loans. ...

Still, the IMF said that the political risks to the program are "considerable," adding uncertainty to a process that has roiled European markets and heightened the sense of confusion around how the continent - and particularly the 16 nations that share the euro as a currency - will settle a long list of economic problems.

The thing to note here is that the Irish government did not originally want EU/IMF funds, and the opposition party still doesn't. If the Irish Labour Party wins next year's election, as it appears they will, then it seems likely that Ireland will renege on the agreement. And quite frankly they should. The Irish got a raw deal that is brazenly engineered to benefit European bankers over the populace. Ireland can point to Iceland's better-than-expected performance since it refused to guarantee its banking sector's debts and get better terms, or else boycott any deal, allow their banks to default, leave the Euro and devalue the currency, and try to recover that way. Either way, there is no reason to stick to the deal as it stands.